Shares of ETHZilla (ETHZ) nosedived almost 30% on Friday as the company announced a potential flood of 74.8 million convertible shares hitting the market, stoking fears of dilution among investors. The sharp decline in the stock price came despite ETHZilla’s hefty ether treasury, which seemed promising at first glance. However, the prospect of existing stakes losing value overshadowed the company’s formidable crypto assets.
A New Chapter with Growing Pains
Earlier this month, ETHZilla transitioned from its former identity as biotech firm 180 Life Science, pivoting to a crypto treasury firm—a move that initially sparked excitement. The company revealed it holds 82,186 ether, valued at approximately $349 million, and $238 million in cash equivalents. This strategic pivot sent ETHZilla’s shares soaring by 80% earlier in August, but the euphoria was short-lived.
Dilution concerns stem from the company’s filing indicating an increase in outstanding shares by about 46%, from 164.4 million to 239.3 million. The issuance won’t bring any additional funds to ETHZilla, as proceeds from selling converted shares will bypass the corporate coffers entirely. Shareholders, thus, face a reduced slice of the pie—a classic case of dilution. This mirrors strategies seen in other firms, as discussed in our analysis of corporate treasury investments.
Industry watchers like Marcus Blake, an analyst at Crypto Insights, noted, “The dilution fear is tangible. While ETHZilla’s ether holdings are impressive, investors are naturally wary of their stakes being watered down significantly.”
Ether’s Resurgence and Influential Backers
Amid these corporate shifts, Ethereum’s own market performance has been nothing short of stellar in 2025. The token has climbed 38% year-to-date, outpacing Bitcoin’s 24% rise. It’s a stark contrast to last year’s performance, where Ethereum lagged behind with a mere 31% gain compared to Bitcoin’s 121% surge. This year’s rally is partly fueled by newfound regulatory clarity in the U.S., encouraging Wall Street’s embrace of Ethereum as a backbone for innovative financial products.
Adding to ETHZilla’s intrigue is its roster of heavyweight supporters, including Peter Thiel. Through his Founders Fund, Thiel holds a 7.5% stake in ETHZ. The fund also has significant interests in Bitmine Immersion Technologies, which recently secured $250 million to bolster its ether reserves. Thiel’s involvement underscores a broader trend among influential investors betting on Ethereum’s potential to underpin future financial infrastructures. This strategy aligns with efforts by other firms to counteract market pressures, as noted in our recent coverage on Ethereum Treasury’s ‘Loyalty Payment’.
The Market’s Mixed Signals
Despite these bullish undercurrents, Friday’s selloff starkly contrasted with broader market movements. The Nasdaq, S&P 500, and Dow all posted gains following Federal Reserve Chair Jerome Powell’s remarks, while ether itself saw a 9% increase in the past 24 hours. Yet, for ETHZilla, the looming specter of dilution proved too heavy to ignore.
The tension between the company’s potential as a major ether holder and the immediate dilution concerns leaves investors in a quandary. While ETHZilla’s balance sheet ranks it among the largest ether treasuries in the corporate world, the immediate risk of reduced ownership stakes presents a significant hurdle.
Looking ahead, the market is left wondering—can ETHZilla leverage its substantial crypto assets to soothe investor nerves, or will the fear of dilution continue to cast a shadow over its promising new chapter? As the crypto landscape evolves, these questions will likely play a pivotal role in shaping ETHZilla’s trajectory.
Source
This article is based on: ETHZilla Shares Plunge Almost 30% as Dilution Fears Overshadow $349M Ether Treasury
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
